Tag Archives: economy

Though Hugo Chavez was a huge critic of capitalism, US rice farmers are still benefiting from the late Venezuelan president’s socialist economic policies. While president, Chavez attempted to aid the poor by putting large farms under state control, reorganizing land ownership, and controlling food prices.

However, those policies have negatively affected Venezuela’s farming and manufacturing communities; for instance, turning the country into net importer, rather than net exporter, of rice. Additionally, manufacturing of steel, sugar, beef and coffee has dropped, forcing Venezuela to depend on those imports as well.

In 2010, Chavez nationalized Venezuela’s main farm-supply company, making it difficult for farmers to obtain farming basics, like fertilizer and herbicide. Chavez’s government also set prices for rice and other goods; and while those prices were fixed, inflation still rose. Venezuelan farmers could no longer afford new equipment. With no basic farming supplies and without adequate equipment, Venezuelan rice farmers’ yields decreased, causing Venezuela to look elsewhere for rice, i.e. the US. Venezuelan economic policies have made US rice farmers very happy.

According to the Department of Agriculture, in the first half of 2013, Venezuela imported $94 million of rice from the US, a 62% increase from 2012, making Venezuela the US’s fourth-biggest rice market. In 2011, imports from the US reached $12 billion, a 16% increase from 2010. Alcoa and Kimberly-Clark, a personal care corporation, are two US companies that export the most products to Venezuela.

Venezuela has still managed to hold on to oil, the country’s biggest commodity, which provides for half of the government’s income. This year, oil prices are $105/barrel; if they somehow decrease to $90/barrel, then the government will have to drastically curb imports to make up for the loss.

Hog prices have been steadily declining for the past four months, and are currently at a low. The reasons behind the decreasing demand for pork are interesting, mostly due to economic concerns.

US consumers have opted for inexpensive meats, like chicken, instead of pork; additionally, consumers are feeling certain economic pressures, such as rising prices at the pump.

Pork exports have already dropped 15% from last January, as the big meat buyers — China, Japan, Mexico and Russia — curtail purchases. In the last few years, the US has become fairly dependent on pork exports, as China is the world’s biggest pork consumer. However, as China’s population and demand for the meat grows, the country has stocked up on plenty of domestic supplies. Japan is the US’s biggest buyer, but has been experiencing a weak economy and currency, and doesn’t have the funds for pork exports. Russia has chosen to no longer buy pork from the US, since many US pork farms give their pigs medicated feed that generates leaner meat.

As domestic and international demand for pork decreases, US farmers are faced with larger inventories of pork. People begin to buy more pork during the warmer months, but the continued cold weather has delayed the spring and summer grilling season.

It is hard to say if this trend is cyclical or the economics are changing more structurally.